What is a Bitcoin?

Bitcoin has gained tremendous attention in recent times. Bitcoin is a form of cryptocurrency or digital money. Cryptocurrency can be classified as virtual currency or alternative currency to a facilitate transaction. The entire process relies on a real-time ledger of the transaction in blockchain . Bitcoin is the first kind of cryptocurrency which was invented by an anonymous person or group named Satoshi Nakamoto in 2009.

How is a Bitcoin created?

Bitcoin is created as a reward for the process called Bitcoin. Miners use open source software to complete two tasks for ‘Bitcoin mining’; 1) miners authenticate the validity of new bitcoin transactions that are remaining to be recorded on a public ledger, and 2) miners should decode an encrypted, unique ID, produced by the bitcoin formula, to compute the confirmed records to  public and for that they are awarded or discover bitcoins. The growing list of records of these transactions are called “blocks”; every block contains a hash pointer to the previous block which acts as a link, this chain of blocks is called “blockchain”. A blockchain is a public ledger for all bitcoin transactions.

Threats pertaining to Bitcoins:

What made Bitcoin popular is anonymity, however, unfortunately, criminals also enjoy anonymity. Bitcoin made the process of money laundering much easier. There is also a rise in the number of hackers who use ransomware attack on the target; the developers of such ransomware want a ransom paid in the form of Bitcoins to release hacked computer files.

The blockchain is essential in bitcoin formation, however, it has its vulnerabilities – they are easy to locate and overtake which gives hackers multiple chances to attack. Bitcoin wallet is also commonly targeted as there are reports of wallet theft containing the massive amount, scams theft, defunct “stock exchange”.

“Silk Road”, a website on the dark web to purchase drugs and other illegal items was shut down by FBI.

Since blockchain is decentralized and offline (not in one server), it cannot be controlled by a single entity and so it has no single point of failure, however, there have been major security breaches in recent years as sensitive data such as, account details, name and address of bitcoin owners had been exposed to malicious hackers. Another way bitcoin can be compromising is when an attacker installs ‘keylogger software’ that can help them identify the codes to a bitcoin user’s wallet.

Members of the bitcoin network must be aware of this risk and take all necessary precautions against keylogger applications. There are also many fake wallet applications floating in the market; recently Google kicked out 3 fake wallet application from the Google Play store. The applications pretended to be authorized wallets but were a complete scam. These three apps that were downloaded by users were identified as 1) Bitcoin mining 2) Blockchain Bitcoin Wallet – Fingerprint 3) Fast Bitcoin Wallet.

Besides these fake apps, cybercriminals are now designing malware that uses personal computers of users to mine cryptocurrencies; these infected systems let the malware use their computing power, without the user’s knowledge. By hijacking a computer or phone, a hacker assigns the job of mining on those devices. Enormous amounts of computing power that is required to solve complex mathematical problems are involved in the mining process and authenticating a transaction which ultimately leads to the generation of cryptocurrency as a reward.

Bitcoin, of course, isn’t the sole reason for cyber attacks. With the exponential increase of devices that are connected to the net, otherwise called the IoT (Internet of Things), hackers have more ways of peeping into our data systems than ever before. We are all progressively exposed to cyber attacks and with bitcoin; it has become easier for cybercriminals to make profit while remaining anonymous.

Every cryptocurrency comes with a promise to turn the world around but only a few survive; however, Bitcoin may be here to stay. The US government has acknowledged Bitcoin as a property and is trying to regulate it as ‘property vulnerable to exploitation’. By registering corporations that use Bitcoins, the government is trying to make payment for criminal activities using Bitcoin more and more difficult.  However, as the popularity of bitcoin increases so do the new threats pertaining to the exploitation of bitcoins for various criminal schemes. Cybersecurity specialists need to perceive the impact that bitcoin has on their profession and the way it might influence their way of conducting business. We cannot stop the growth of bitcoin, but we sure can try to protect ourselves from its undesirable effects. As the cybersecurity pioneer, John McAfee, describes, “You can’t stop things like Bitcoin. It’s like trying to stop gunpowder.”